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Monday, December 17, 2012

How will 2013 turn out to be for the global semiconductor industry? Will there be growth for the global EDA industry? Importantly, how will the Indian semiconductor industry perform in 2013? I asked Jaswinder Ahuja, corporate VP and MD, Cadence Design Systems India these questions.

Outlook for global semicon industry in 2013

First, how is the outlook for global semiconductor industry in 2013 going to be? Ahuja said: "The long term outlook for the semiconductor industry remains positive, with mobility and cloud computing being the key drivers. The global economy is forecast to grow around 4 percent annually through 2016, according to an April 2012 report from the International Monetary Fund (IMF).

"In its June 2012 report, Gartner predicted growth in electronics and semiconductor industries to outpace that of the world GDP growth, at 5½ percent annually to approach $2 trillion for electronics and 6 percent annually for semiconductors through 2016. So, the semiconductor industry outlook remains very positive overall.

"In the near term, multiple challenges will need to be weathered with respect to the global economic climate, especially in European markets. The JP Morgan/GSA Semiconductor Index of Leading Indicators points to a soft semiconductor industry in 2013. However, there are lot of new products in the mobile and tablet space that are driving demand, such as the iPhone 5, Microsoft Surface, and Samsung Galaxy S III.

"The China semiconductor space is emerging as a key market for semiconductor company revenue, and forecasts predict that it will show rapid annual growth rate. The consolidation and M&A activities that we are seeing in the global semiconductor industry also indicate a positive outlook for the upcoming year.

"In India as well, the semiconductor industry will continue to see growth. The injection of funds and other support outlined in the National Policy on Electronics will provide an impetus to home-grown design and manufacturing, which should start gaining traction in 2013."

Five trends for 2013
What would be the three or five trends likely to be visible in 2013? Ahuja said Cadence sees five big trends that will drive growth in the near and long term. These are: mobility, application driven design, video, cloud and security.

Probably, the most pervasive change in electronics recently has been mobility. When we talk about mobility, it’s just not about smart phones or tablets, but any kind of device which is mobile. Within the mobile space, software applications help system manufacturers and vendors differentiate themselves and stand apart from the competition. The need to have apps on all kinds of devices is driving rapid growth, as well as placing new demands on EDA companies.

The entertainment industry will be the key driver for video, and as the year progresses, we will continue to see more and more products and solutions introduced to tap into the demand. For the semiconductor industry, video will drive growth both in the end consumer market (mobile platforms) and the enterprise space (networking industry).

In many ways, the backbone to mobility is the cloud. With its network servers and infrastructure, the cloud is what delivers much of the content and value to all of those mobile devices. Statistics show that we need one server for every 600 smart phones and one for every 120 tablets. So there is a big need for data centers which can provide support for all the computing and back-end operations.

Security of data in mobile devices and the cloud will continue to be a challenge in the near future. There will be renewed calls to develop products that can protect critical infrastructure and sensitive information from security breaches.

Outlook for EDA industry in 2013
Now, let's turn our attention to the global EDA industry. What will be the outlook for the EDA industry in 2013? As per Jaswinder Ahuja, the global EDA industry is going through a consolidation phase now, with a lot of M&A activity. The outlook for the EDA industry is closely tied to and mirrors that of the semiconductor industry. Given the promising growth rate predicted for semiconductors through 2016 by Gartner, we are cautiously optimistic about the trend for EDA in the coming years.

Another interesting point to note is that for EDA companies, business comes from the design activity that our customers are engaged in, and not the consumption of consumer electronics products. So, the short term slowdown in electronics industry does not directly impact the EDA industry. And typically in a slowdown economy, companies try to design their way out of the slump.

From the technology standpoint, design complexity is going up by 2-3X in multiple dimensions every two years. Semiconductor companies working on chips for applications such as mobile, gaming and consumer electronics are designing at advanced nodes to leverage benefits of power, performance and area.

Coupled together, these two trends have greatly amplified design challenges such as mixed-signal and low-power design, as well as IP verification and reuse. More than ever before, designers need bleeding-edge technologies and solutions to help them meet and overcome these challenges, and EDA companies like Cadence will continue to focus on innovation to deliver cutting-edge technology.

Advanced node design cannot be done in a vacuum. Ecosystem collaboration is critical to success. Increasingly, we will also see more collaborations and partnerships announced in the industry similar to the October 2012 announcement by Cadence with ARM and IBM about the tapeout of a 14nm FinFET test chip.

Outlook for Indian semiconductor industry in 2013
Finally, how does Cadence estimate the fortunes of the Indian semiconductor industry in 2013? Ahuja concluded: "As with the semiconductor industry worldwide, the Indian industry is also going through a major transformation. The challenges we face are similar in nature to the global issues.

"Telecom is the biggest market for semiconductor industry in India and given the flat growth in telecom, we have had to weather some challenges. However, we foresee better prospects for 2013, especially with the passing of the National Policy on electronics. We hope that growth in the near future will be driven by the burgeoning domestic electronics market. Another positive trend is the many new startups that have mushroomed in IP and services, driven by market maturity and favorable economic policy indicators."